The energy service company (ESCO) market in the United States has gone through a difficult period in recent years. Customers have grown concerned about the impact of energy performance contracts on their financial positions, and many of the resources, including policy measures, that drove growth prior to 2011 have been exhausted. As a result, ESCO market activity has slowed considerably. According to a new report from Navigant Research, however, growth in the U.S. ESCO market is set to resume. Annual revenue for U.S. ESCOs will grow from $4.9 billion in 2013 to almost $8.3 billion in 2020, the study concludes.

“Over the past two years, ESCOs have found it difficult to attract customers and convert backlog into revenue,” says Eric Bloom, senior research analyst with Navigant Research. “The difficulties imposed on key customer segments, such as municipalities, by weak economic conditions across the United States have constrained demand. Over the next 7 years, though, growth is expected to resume as energy efficiency measures take effect across a broad swath of the economy.”

The federal sector, for example, which has long been an important part of the ESCO market, will undergo significant growth, thanks to a number of supportive measures including the 2011 Better Buildings Initiative, which aims to provide $2 billion of energy performance contracts in the federal sector by the end of 2013. Other sectors, such as commercial and industrial firms and public housing, will also start to expand once broader economic conditions improve, according to the report.